Protect the Federal-State-Local Partnership for Medicaid

Action Needed

Urge your members of Congress to support the federal-state-local partnership structure for financing and delivering Medicaid services and to oppose any measure that would further shift federal and state Medicaid costs to counties–including cuts, caps, block grants and new limits on counties’ ability to raise the non-federal match or receive supplemental payments.

Background

Medicaid is a federal entitlement program administered by states, with assistance from counties, that provides health and long-term care insurance to nearly 70 million low-income families and individuals, or just under one in five Americans. Authorized under the Social Security Act, Medicaid is jointly financed by federal, state and local governments, including counties. For Fiscal Year (FY) 2024, states and local governments contributed over a third of the $ 909 billion in total Medicaid spending. During the Great Recession, contributions to the non-federal share increased by 21 percent as more than 10 million additional people enrolled in Medicaid. Likewise, during the COVID-19 pandemic, enrollment in Medicaid increased by nearly 20 percent, effectively raising contributions to the program by counties and other local governments.

Counties diligently protect the health of our 331 million residents with an annual investment of $130 billion in community health. Through over 900 county-supported hospitals, 700 county-owned and supported long-term care facilities, 750 county behavioral health authorities and 1,900 local public health departments, counties deliver health services for residents, including those that are eligible for Medicaid reimbursement.

Counties may contribute up to 60 percent of the share of Medicaid costs that are not covered by the federal government in each state (also called the non-federal share). In states where counties contribute to the non-federal share, they are responsible for partially funding residents’ Medicaid costs and/or the administrative, program, physical health and behavioral health costs.

Likewise, Medicaid boosts local economies by enhancing healthcare access for low-income residents, improving their health and productivity. It also cuts counties’ costs for uncompensated care and helps retain healthcare professionals in rural areas through patient revenue. 

The July 4, 2025 enactment of the One Big Beautiful Bill Act (P.L. 119-21), often referred to as H.R. 1, restructured key elements of the Medicaid program through changes to financing mechanisms, coverage pathways and eligibility requirements. These reforms were adopted alongside broader federal fiscal objectives and reflect an ongoing effort to recalibrate the balance between federal oversight, state flexibility and program spending. 

The impact of these wide-ranging reforms ultimately converges on two core county concerns: local budgets and resident health outcomes. Increased constraints on Medicaid financing or the addition of new administrative requirements intensifies pressures on county systems that both administer and fund the program. However, despite these challenges, the legislation also leaves room for expanded opportunities for care delivery, particularly in long-term care and rural health settings. As states implement these changes, counties will continue to experience variation in impact based on governance structure, service delivery models and local health care infrastructure.

Key Talking Points

• Counties oppose financing reforms that shift costs to the local level. Proposals that reduce the federal share of funding or impose new cost-sharing requirements—without accounting for local fiscal realities—put additional strain on county budgets and public health systems. Cost shifts undermine the ability of counties to maintain essential services and can increase uncompensated care burdens at the local level, forcing difficult tradeoffs like reducing eligibility or cutting other essential programs to balance local budgets.
• New administrative requirements associated with work requirements or increased frequency of program eligibility and verification checks could overwhelm county systems. Counties that play a significant role in Medicaid eligibility and enrollment may face significant operational challenges in verifying and enforcing proposed work and community engagement requirements once implementation begins in 2027. These additional Medicaid requirements necessitate increased staff, systems and infrastructure to meet state and federal rules. Federal changes to eligibility increase administrative burdens, risking delays and requiring more resources. Data also shows that work requirements will lead to greater coverage loss, increasing uncompensated care costs for both states and counties.
• Federal mandates undermine Medicaid’s state and local flexibility. Medicaid’s strength lies in its ability to adapt to local needs, supported by a balance of federal, state and county roles. Federal policies that restrict eligibility, impose financial penalties, or override local administrative discretion threaten this balance, limiting counties’ ability to deliver tailored services for residents and eroding the shared governance that makes Medicaid work.